I am a US citizen and have plans to retire in Spain.My income will be from social security,private pensions and 401k plans.I was told that I will be in the 49%bracket(61000 euros).Has anyone more info on this subject?

If I recall correctly, tax for the upper bracket is now 48%. Nevertheless the number is to evolve fairly soon. There are two trends of this matter, first the number of brackets is reduced every couple of years. There is consistant trend of reducing income tax hoping to recover it through sales tax (which has greatly worked up to now). For example, there is a planned set of changes which will move the higest tax from 48 to 45 to happen fairly soon.(most probably next year).

That income should be in the lower side of the upper brackets, and it will problably fall down into medium brackets with the next bracket reduction, it may have happened even in the fiscal changes of this year. I am not an specialist, I speak only from experience.

On the other side, there is consistant trend of reducing income tax hoping to recover it through sales tax (which has greatly worked up to now). For example, there is a planned set of changes which will move the higest tax from 48 to 45 to happen fairly soon.(most probably next year).

Once you are here as a resident, you can start using the tax reduction mechanisms available when you have an easily taxable fixed rent. That is (1)buying a house with a mortgage (2)If you are under 60 open a pension fund here. Tax effect of both options are strong specially the second. You will get a tax refund tipically 3weeks after presenting your tax declaration.

Marcus cj writes: Just as here in the US, there are different rules for unearned income (pensions & annuities, etc.) and retirement benefits. And I doubt that Spain will consider your Government Social Security benefit taxable income. One relative in Madrid retired at age-60 and really 'made out' because it gave them better tax treatment of his spouse's earned income. She's a Computer Systems Analyst and makes pretty good money. You really need expert advice. I can't tell you how to get such advice other than: go to Spain and contract with a tax expert (lawyer or accountant). There are many retired Americans living along the Costa del sol & Costa de la luz. That might be a good place to start.